DEFENSE ACQUISITIONS

Where Should Reform Aim 

Next?

Statement of Paul L. Francis, Managing Director

Acquisition and Sourcing Management

Testimony 

Before the Committee on Armed 

Services, House of Representatives

For Release on Delivery 

Expected at 10:00 a.m. EDT

Tuesday, October 29, 2013

GAO-14-145T

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-145T, a testimony 

before Committee on Armed Services, House 

of Representatives. 

October 29, 2013

DEFENSE ACQUISITIONS 

Where Should Reform Aim Next?

Why GAO Did This Study

DOD’s acquisition of major weapon 

systems has been on GAO’s high risk 

list since 1990. Over the past 50 years, 

Congress and DOD have continually 

explored ways to improve acquisition 

outcomes, including reforms that have 

championed sound management 

practices, such as realistic cost 

estimating, prototyping, and systems 

engineering. Too often, GAO reports 

on the same kinds of problems today 

that it did over 20 years ago. 

The topic of today’s hearing is: “25 

Years of Acquisition Reform: Where 

Do We Go From Here?” To that end, 

this testimony discusses (1) the 

performance of DOD’s major defense 

acquisition program portfolio; (2) the 

management policies and processes 

currently in place to guide those 

acquisitions; (3) the incentives to 

deviate from otherwise sound 

acquisition practices; and (4) 

suggestions to temper these 

incentives. This statement draws from 

GAO’s extensive body of work on 

DOD’s acquisition of weapon systems.

What GAO Found

The Department of Defense (DOD) must get better outcomes from its weapon 

system investments, which in recent years have totaled around $1.5 trillion or 

more. Recently, there have been some improvements, owing in part to reforms. 

For example, cost growth declined between 2011 and 2012 and a number of 

programs also improved their buying power by finding efficiencies in 

development or production and requirements changes. Still, cost and schedule 

growth remain significant; 39 percent of fiscal 2012 programs have had unit cost 

growth of 25 percent or more. 

DOD’s acquisition policy provides a methodological framework for developers to 

gather knowledge that confirms that their technologies are mature, their designs 

stable, and their production processes are in control. The Weapon Systems 

Acquisition Reform Act of 2009 and DOD’s recent “Better Buying Power” 

initiatives introduced significant changes that, when fully implemented, should 

further strengthen practices that can lead to successful acquisitions. GAO has 

also made numerous recommendations to improve the acquisition process, 

based on its extensive work in the area. While recent reforms have benefited 

individual programs, it is premature to say there is a trend or a corner has been 

turned. The reforms still face implementation challenges and have not yet been 

institutionalized within the services. 

Reforms that focus on the methodological procedures of the acquisition process 

are only partial remedies because they do not address incentives to deviate from 

sound practices. Weapons acquisition is a complicated enterprise, complete with 

unintended incentives that encourage moving programs forward by delaying 

testing and employing other problematic practices. These incentives stem from 

several factors. For example, the different participants in the acquisition process 

impose conflicting demands on weapon programs so that their purpose 

transcends just filling voids in military capability. Also, the budget process forces 

funding decisions to be made well in advance of program decisions, which 

encourages undue optimism about program risks and costs. Finally, DOD 

program managers’ short tenures and limitations in experience and training can 

foster a short-term focus and put them at a disadvantage with their industry 

counterparts. 

Drawing on its extensive body of work in weapon systems acquisition, GAO sees 

several areas of focus regarding where to go from here: 

• at the start of new programs, using funding decisions to reinforce desirable 

principles such as well-informed acquisition strategies; 

• identifying significant risks up front and resourcing them; 

• exploring ways to align budget decisions and program decisions more 

closely; and

• attracting, training, and retaining acquisition staff and managers so that they 

are both empowered and accountable for program outcomes. 

These areas are not intended to be all-encompassing, but rather, practical places 

to start the hard work of realigning incentives with desired results. View GAO-14-145T. For more information, 

contact Paul Francis at (202) 512-4841 or 

francisp@gao.gov. 
 

Page 1 GAO-14-145T 

Chairman McKeon, Ranking Member Smith, and Members of the 

Committee:

I am pleased to be here today to discuss weapon systems acquisition and 

where reform should focus next. Weapon systems acquisition has been 

on GAO’s high risk list since 1990.1

Today, I will (1) provide summary cost and schedule information on 

DOD’s portfolio of major weapon systems; (2) describe the policies and 

processes in place to guide those acquisitions; (3) discuss incentives to 

deviate from otherwise sound acquisition practices; and (4) suggest ways 

to temper these incentives. This statement draws from our extensive body 

of work on DOD’s acquisition of weapon systems and the numerous 

recommendations we have made both on individual weapons and 

systemic improvements to the acquisition process. The work on which 

this testimony is based was conducted in accordance with generally 

accepted government auditing standards. Those standards require that 

we plan and perform the audit to obtain sufficient, appropriate evidence to 

provide a reasonable basis for our findings and conclusions based on our 

audit objectives. We believe the evidence obtained provides a reasonable 

basis for our findings and conclusions based on our audit objectives.

Over the past 50 years, Congress 

and the Department of Defense (DOD) have explored ways to improve 

acquisition outcomes, including recent actions like the Weapon Systems 

Acquisition Reform Act and the department’s own “Better Buying Power” 

initiatives. These and other reforms have championed sound 

management practices, such as realistic cost estimating, prototyping, and 

systems engineering. DOD’s declining budgets and the impact of 

sequestration have lent additional impetus to reduce the costs of 

weapons. While some progress has been made on this front, too often we 

report on the same kinds of problems today that we did over 20 years 

ago. The cost growth of DOD’s 2012 portfolio of weapon systems about

$411 billion and schedule delays average more than 2 years. To get 

better results the focus should not be on adding to or discarding 

acquisition policies, but on the incentives that work against them.

 

1

GAO, High Risk Series: An Update, GAO-13-283 (Washington, D.C.: February 2013).

 
 

Page 2 GAO-14-145T 

There can be little doubt that we can—and must—get better outcomes 

from our weapon system investments. As seen in table 1, the value of 

these investments in recent years has been on the order of $1.5 trillion or 

more, making them a significant part of the federal discretionary budget.

Table 1: Analysis of DOD Major Defense Acquisition Program Portfolios

Fiscal year 2014 dollars

Fiscal year

2008 2011 2012

Portfolio size

Number of programs 95 95 85

Total planned commitments $1.6 trillion $1.7 trillion $1.5 trillion

Commitments outstanding $898 billion $813 billion $744 billion

Portfolio indicators

Change in development costs from first 

full estimate

42 percent 54 percent 49 percent

Change in total acquisition cost from first 

full estimate

25 percent 40 percent 38 percent

Estimated total acquisition cost growth $323 billion $465 billion $411 billion

Share of programs with 25 percent or 

greater increase in program acquisition 

unit cost since first full estimate

42 percent 41 percent 39 percent

Average delay in initial operating 

capability

22 months 23 months 27 months

Source: GAO analysis of DOD data.

Note: The Ballistic Missile Defense System is excluded from the analysis of both portfolio size and 

portfolio indicators as it does not have comparable cost and schedule data. Other programs were also 

excluded from the analysis of indicators when comparable data did not exist.

Large programs have an outsized impact on the aggregate portfolio. For 

example, Joint Strike Fighter costs have now consumed nearly a quarter 

of the entire portfolio. Yet, as indicated in table 1, 39 percent of programs 

have had unit cost growth of 25 percent or more. Recently, we have seen 

some modest improvements. For example, cost growth has declined 

between 2011 and 2012.2

 

2

GAO, Defense Acquisitions: Assessments of Selected Weapon Programs, 

We have also observed that a number of 

programs have improved their buying power by finding efficiencies in 

GAO-13-294SP (Washington, D.C.: Mar. 28, 2013).

Trends in DOD’s 

Portfolio of Major 

Acquisitions 
 

Page 3 GAO-14-145T 

development or production, and requirements changes. On the other 

hand, cost and schedule growth remain significant when measured 

against programs’ first full estimates. The performance of some very large 

programs are no longer reflected in the latest data as they are no longer 

acquisition programs. For example, the Future Combat Systems program 

was canceled in 2009 after an investment of about $18 billion and the F22 Raptor program has completed aircraft procurement. In addition, the 

Ballistic Missile Defense System are not included in any of the analysis as 

those investments have proceeded without a baseline of original 

estimates, so the many difficulties experienced in the roughly $130 billion 

program are not quantifiable.

The enormity of the investment in acquisitions of weapon systems and its 

role in making U.S. fighting forces capable, warrant continued attention 

and reform. The potential for savings and for better serving the warfighter 

argue against complacency.

When one thinks of the weapon systems acquisition process, the image 

that comes to mind is that of the methodological procedure depicted on 

paper and in flow charts. DOD’s acquisition policy takes the perspective 

that the goal of acquisition is to obtain quality products that satisfy user 

needs at a fair and reasonable price.3 The sequence of events that 

comprise the process defined in policy reflects principles from disciplines 

such as systems engineering, as well as lessons learned, and past 

reforms. The body of work we have done on benchmarking best practices 

has also been reflected in acquisition policy.4

 

3

Department of Defense Directive 5000.01, The Defense Acquisition System (Nov. 20, 

2007).

Recent, significant changes 

to the policy include those introduced by the Weapon Systems Acquisition 

Reform Act of 2009 and the department’s own “Better Buying Power” 

initiatives which, when fully implemented, should further strengthen 

4

GAO, Best Practices: DOD Can Achieve Better Outcomes by Standardizing the Way 

Manufacturing Risks Are Managed, GAO-10-439 (Washington, D.C: Apr. 22, 2010); Best 

Practices: Capturing Design and Manufacturing Knowledge Early Improves Acquisition 

Outcomes, GAO-02-701 (Washington, D.C.: July 15, 2002); Best Practices: Better 

Matching of Needs and Resources Will Lead to Better Weapon System Outcomes, GAO01-288 (Washington, D.C.: Mar. 8, 2001); and Best Practices: Better Management of 

Technology Development Can Improve Weapon System Outcomes, GAO/NSIAD-99-162 

(Washington, D.C.: July 30, 1999).

One Side of the 

Acquisition Process: 

Stated Policy
 

Page 4 GAO-14-145T 

practices that can lead to successful acquisitions.5 The policy provides a 

framework for developers of new weapons to gather knowledge that 

confirms that their technologies are mature, their designs are stable, and 

their production processes are in control.6

Table 2 summarizes these steps and best practices, organized around 

three key knowledge points in a weapon system acquisition.

These steps are intended to 

ensure that a program will deliver the capabilities required utilizing the 

resources—cost, schedule, technology, and personnel—available. 

Successful product developers ensure a high level of knowledge is 

achieved at key junctures in development. We characterize these 

junctures as knowledge points. While there can be differences of opinion 

over some of the specifics of the process, I do not believe there is much 

debate about the soundness of the basic steps. It is a clear picture of 

“what to do.” 

 

5

Pub. L. No. 111-23 as amended, Office of the Under Secretary of Defense, Acquisition, 

Technology and Logistics Memorandum: “Better Buying Power: Mandate for Restoring 

Affordability and Productivity in Defense Spending” (June 28, 2010). Office of the Under 

Secretary of Defense, Acquisition, Technology and Logistics Memorandum: “Better Buying

Power 2.0: Continuing the Pursuit for Greater Efficiency and Productivity in Defense 

Spending” (Nov. 13, 2012).

6

Department of Defense Instruction 5000.02, Operation of the Defense Acquisition 

System (Dec. 8, 2008).
 

Page 5 GAO-14-145T 

Table 2: Best Practices for Knowledge-based Acquisitions

Knowledge Point 1: Start of product development activities (Milestone B)

Demonstrate technologies sufficiently to ensure they are mature and work as intended 

Ensure that requirements are informed by a preliminary system design 

Establish cost and schedule estimates based on the preliminary design and other system 

engineering tools (such as prototyping) 

Constrain development to 5 years or so in anticipation of future upgrades 

Conduct independent assessment of risks and cost 

Develop a suitable contract strategy

Fully fund the planned development work

Hold major milestone decision review to begin product development 

Knowledge Point 2: Critical design review midway through product development 

Complete 90 percent of engineering design drawing packages to ensure design is stable

Demonstrate with system integration prototype that design performs as intended 

Identify critical manufacturing processes and key system characteristics

Establish targets and growth plan for product reliability 

Conduct independent cost estimate 

Conduct system critical design review to ensure design meets requirements 

Knowledge Point 3: Initiation of production for delivery to customer (Milestone C)

Demonstrate critical manufacturing processes on a pilot production line

Build and test production-representative prototypes to demonstrate product in 

operational environment and to achieve reliability goal

Collect data on critical manufacturing processes and demonstrate that they are in 

statistical control to ensure quality

Conduct independent cost estimate 

Conduct major milestone decision review to begin production 

Source: GAO.

Our work over the last year shows that, to the extent reforms like the 

Weapon Systems Acquisition Reform Act and DOD’s Better Buying 

Power initiatives are being implemented, they are having a positive effect 

on individual programs. For example, several programs we have 

reviewed are:

• making early trade-offs among cost, schedule, and technical 

performance requirements;

• developing more realistic cost and schedule estimates;

• increasing the amount of testing during development; and
 

Page 6 GAO-14-145T 

• placing greater emphasis on reliability.

These improvements do not yet signify a trend or suggest that a corner 

has been turned. The reforms themselves still face implementation 

challenges such as staffing and clarity of guidance and will doubtless 

need refining as experience is gained. We have made a number of 

recommendations on how DOD can improve implementation of the 

Weapon Systems Acquisition Reform Act.7

To a large extent, the improvements we have seen tend to result from 

external pressure exerted by higher level offices within DOD on individual 

programs. In other words, the reforms have not yet been institutionalized 

within the services. We still see employment of other practices—that are 

not prescribed in policy—such as concurrent testing and production, 

optimistic assumptions, and delayed testing. These are the same kinds of 

practices that perpetuate the unsatisfactory results that have persisted in 

acquisitions through the decades, such as significant cost growth and 

schedule delays. They share a common dynamic: moving forward with 

programs before the knowledge needed to make decisions is sufficient.

We have reported that most programs still proceed through the critical

design review without having a stable design, even though we have made 

a number of recommendations on the importance of this review and how 

to prepare for it.8 Also, programs proceed with operational testing before 

they are ready. Other programs are significantly at odds with the 

acquisition process. Among these I would number Ballistic Missile 

Defense System, Future Combat Systems (since canceled), Littoral 

Combat Ship, and airships. We recently reported on the Unmanned 

Carrier-Launched Airborne Surveillance and Strike program which 

proposes to complete the main acquisition steps of design, development, 

testing, manufacturing, and initial fielding before it formally enters the 

acquisition process.9

 

7

GAO, Weapons Acquisition Reform: Reform Act Is Helping DOD Acquisition Programs 

Reduce Risk, but Implementation Challenges Remain, GAO-13-103 (Washington, D.C.: 

Dec. 14, 2012). 

8 GAO-02-701

9

GAO, Defense Acquisitions: Navy Strategy for Unmanned Carrier-Based Aircraft System 

Defers Key Oversight Mechanisms, GAO-13-833 (Washington, D.C.: Sep. 26, 2013).
 

Page 7 GAO-14-145T 

The fact that programs adopt practices that run counter to what policy and 

reform call for is evidence of the other pressures and incentives that 

significantly influence program practices and outcomes. I will turn to these 

next.

An oft-cited quote of David Packard, former Deputy Secretary of Defense, 

is: “We all know what needs to be done. The question is why aren’t we 

doing it?” To that point, reforms have been aimed mainly at the “what” 

versus the “why.” They have championed sound management practices, 

such as realistic estimating, thorough testing, and accurate reporting. 

Today, these practices are well known. We need to consider that they 

mainly address the mechanisms of weapon acquisitions. Seen this way, 

the practices prescribed in policy are only partial remedies. The 

acquisition of weapons is much more complex than policy describes and 

involves very basic and strongly reinforced incentives to field weapons. 

Accordingly, rival practices, not normally viewed as good management 

techniques, comprise an effective stratagem for fielding a weapon 

because they reduce the risk that the program will be interrupted or called 

into question.

I will now discuss several factors that illustrate the pressures that create 

incentives to deviate from sound acquisition management practices.

The process of acquiring new weapons is (1) shaped by its different 

participants and (2) far more complex than the seemingly straightforward 

purchase of equipment to defeat an enemy threat. Collectively, as 

participants’ needs are translated into actions on weapon programs, the 

purpose of such programs transcends efficiently filling voids in military 

capability. Weapons have become integral to policy decisions, definitions 

of roles and functions, justifications of budget levels and shares, service 

reputations, influence of oversight organizations, defense spending in 

localities, the industrial base, and individual careers. Thus, the reasons 

“why” a weapon acquisition program is started are manifold and 

acquisitions do not merely provide technical solutions.

Another Side of 

Acquisition: 

Incentives 

Several Factors Create 

Incentives to Deviate from 

Sound Acquisition 

Practices

Conflicting Demands 
 

Page 8 GAO-14-145T 

While individual participants see their needs as rational and aligned with 

the national interest, collectively, these needs create incentives for 

pushing programs and encouraging undue optimism, parochialism, and 

other compromises of good judgment. Under these circumstances, 

persistent performance problems, cost growth, schedule slippage, and 

difficulties with production and field support cannot all be attributed to 

errors, lack of expertise, or unforeseeable events. Rather, a level of these 

problems is embedded as the undesirable, but apparently acceptable, 

consequence of the process. These problems persist not because they 

are overlooked or under-regulated, but because they enable more 

programs to survive and thus more needs to be met. The problems are 

not the fault of any single participant; they are the collective responsibility 

of all participants. Thus, the various pressures that accompany the 

reasons why a program is started can also affect and compromise the 

practices employed in its acquisition.

I would like to highlight three characteristics about program funding that 

create incentives in decision making that can run counter to sound 

acquisition practices. First, there is an important difference between what 

investments in new products represent for a private firm and for DOD. In 

a private firm, a decision to invest in a new product, like a new car design, 

represents an expense. Company funds must be expended that will not 

provide a revenue return until the product is developed, produced, and 

sold. In DOD, new products, in the form of budget line items, can 

represent revenue. An agency may be able to justify a larger budget if it 

can win approval for more programs. Thus, weapon system programs can 

be viewed both as expenditures and revenue generators.

Second, budgets to support major program commitments must be 

approved well ahead of when the information needed to support the 

decision to commit is available. Take, for example, a decision to start a 

new program scheduled for August 2016. Funding for that decision would 

have to be included in the fiscal year 2016 budget. This budget would be 

submitted to Congress in February 2015—18 months before the program 

decision review is actually held. DOD would have committed to the 

funding before the budget request went to Congress. It is likely that the 

requirements, technologies, and cost estimates for the new program—

essential to successful execution—may not be very solid at the time of 

funding approval. Once the hard-fought budget debates put money on the 

table for a program, it is very hard to take it away later, when the actual 

program decision point is reached.

Funding Dynamics
 

Page 9 GAO-14-145T 

Third, to the extent a program wins funding, the principles and practices it 

embodies are thus endorsed. So, if a program is funded despite having 

an unrealistic schedule or requirements, that decision reinforces those 

characteristics, not sound acquisition processes. Pressure to make 

exceptions for programs that do not measure up are rationalized in a 

number of ways: an urgent threat needs to be met; a production capability 

needs to be preserved; despite shortfalls, the new system is more 

capable than the one it is replacing; or the new system’s problems will be 

fixed in the future. It is the funding approvals that ultimately define 

acquisition policy.

DOD has a unique relationship with the defense industry that differs from 

the commercial marketplace. The combination of a single buyer (DOD), a 

few very large prime contractors in each segment of the industry, and a 

limited number of weapon programs constitutes a structure for doing 

business that is altogether different from a classic free market. For 

instance, there is less competition, more regulation, and once a contract 

is awarded, the contractor has considerable power.10 Moreover, in the 

defense marketplace, the firm and the customer have jointly developed 

the product and, as we have reported previously, the closer the product 

comes to production the more the customer becomes invested and the 

less likely they are to walk away from that investment.11

J. Ronald Fox, author of Defense Acquisition Reform 1960-2009: An 

Elusive Goal, sums up the situation as follows. “Many defense acquisition 

problems are rooted in the mistaken belief that the defense industry and 

the government-industry relationship in defense acquisition fit naturally 

into the free enterprise model. Most Americans believe that the defense 

industry, as a part of private industry, is equipped to handle any kind of 

development or production program. They also by and large distrust 

While a defense 

firm and a military customer may share some of the same goals, 

important goals are different. Defense firms are accountable to their 

shareholders and can also build constituencies outside the direct 

business relationship between them and their customers. This 

relationship does not fit easily into a contract.

 

10Barry D. Watts and Todd Harrison, Sustaining Critical Sectors of the Defense Industrial 

Base (Washington, D.C.: Center for Strategic and Budgetary Assessments, 2011).

11GAO, Best Practices: Successful Application to Weapon Acquisitions Requires Changes 

in DOD’s Environment, GAO/NSIAD-98-56 (Washington, D.C.: Feb. 24, 1998).

Industry Relationship
 

Page 10 GAO-14-145T 

government ‘interference’ in private enterprise. Government and industry 

defense managers often go to great lengths to preserve the myth that 

large defense programs are developed and produced through the free 

enterprise system.” But neither the defense industry nor defense 

programs are governed by the free market; “major defense acquisition 

programs rarely offer incentives resembling those of the commercial 

marketplace.”12

Dr. Fox also points out that in private industry, the program manager 

concept works well because the managers have genuine decision-making 

authority, years of training and experience, and understand the roles and 

tactics within government and industry. In contrast, Dr. Fox concludes 

that DOD program managers lack the training, experience, and stature of 

their private sector counterparts, and are influenced by others in their 

service, DOD, and Congress.13 In 2006, we reported that program 

managers indicated to us that the acquisition process does not enable 

them to succeed because it does not empower them to make decisions 

on whether the program is ready to proceed forward or even to make 

relatively small trade-offs between resources and requirements as 

unexpected problems are encountered. Program managers said that they 

are also not able to shift personnel resources to respond to changes 

affecting the program.14

We have also reported on the lack of continuity in the tenure of key 

acquisition leaders across the time frames of individual programs. A 

major acquisition can have multiple program managers during product 

development. Other key positions throughout the acquisition chain of 

command also turn over frequently. For example, DOD acquisition 

executives do not necessarily stay in their positions long enough to 

develop the needed long-term perspective or to effectively change 

traditional incentives. Moreover, their decisions can be overruled through 

the cooperative actions of other acquisition participants. The 

effectiveness of reforms to the acquisition process depends in large 

measure on a cadre of good people who may be inadequately prepared 

 

12J. Ronald Fox, Defense Acquisition Reform, 1960-2009: An Elusive Goal (Washington, 

D.C.: U.S. Army Center of Military History, 2011).

13Fox, Defense Acquisition Reform.

14GAO, Best Practices: Better Support of Program Managers Needed to Improve 

Outcomes, GAO-06-110 (Washington, D.C.: Nov. 30, 2005).

The Right People 
 

Page 11 GAO-14-145T 

for their position or forced into the near-term perspective of their tenures. 

In this environment, the effectiveness of management can rise and fall on 

the strength of individuals; accountability for long-term results is, at best, 

elusive.

In my more than 30 years in the area, I do not know of a time or era when 

weapon system programs did not exhibit the same symptoms that they do 

today. Similarly, I do not subscribe to the view that the acquisition process 

is too rigid and cumbersome. Clearly, this could be the case if every 

acquisition followed the same process and strategy without exception. But 

they do not. We repeatedly report on programs approved to modify policy 

and follow their own process. DOD refers to this as tailoring, and we see 

plenty of it.

At this point, we should build on existing reforms—not necessarily by 

revisiting the process itself but by augmenting it by tackling incentives. To 

do this, we need to look differently at the familiar outcomes of weapon 

systems acquisition—such as cost growth, schedule delays, large support 

burdens, and reduced buying power. Some of these undesirable 

outcomes are clearly due to honest mistakes and unforeseen obstacles. 

However, they also occur not because they are inadvertent but because 

they are encouraged by the incentive structure. I do not think it is 

sufficient to define the problem as an objective process that is broken. 

Rather, it is more accurate to view the problem as a sophisticated 

process whose consistent results are indicative of its being in equilibrium. 

The rules and policies are clear about what to do, but other incentives 

force compromises. The persistence of undesirable outcomes such as 

cost growth and schedule delays suggests that these are consequences 

that participants in the process have been willing to accept.

Drawing on our extensive body of work in weapon systems acquisition, I 

have four areas of focus regarding where to go from here. These are not 

intended to be all-encompassing, but rather, practical places to start the

hard work of realigning incentives with desired results.

Reinforce desirable principles at the start of new programs: The principles 

and practices programs embrace are determined not by policy, but by 

decisions. These decisions involve more than the program at hand: they 

send signals on what is acceptable. If programs that do not abide by 

sound acquisition principles win funding, then seeds of poor outcomes 

are planted. The highest point of leverage is at the start of a new 

program. Decision makers must ensure that new programs exhibit 

desirable principles before they are approved and funded. Programs that 

Where Do We Go 

from Here?
 

Page 12 GAO-14-145T 

present well-informed acquisition strategies with reasonable and 

incremental requirements and reasonable assumptions about available 

funding should be given credit for a good business case. As an example, 

the Presidential Helicopter, the Armored Multi Purpose Vehicle, the 

Enhanced Polar System, and the Ground Combat Vehicle are all 

acquisitions estimated to cost at least a billion dollars, in some cases 

several billions of dollars, and slated to start in 2014. These could be 

viewed as a “freshman” class of acquisitions. There is such a class every 

year, and it would be beneficial for DOD and Congress to assess them as 

a group to ensure that they embody the right principles and practices.

Identify significant program risks upfront and resource them: Weapon 

acquisition programs by their nature involve risks, some much more than 

others. The desired state is not zero risk or elimination of all cost growth. 

But we can do better than we do now. The primary consequences of risk 

are often the need for additional time and money. Yet, when significant 

risks are taken, they are often taken under the guise that they are 

manageable and that risk mitigation plans are in place. In my experience, 

such plans do not set aside time and money to account for the risks 

taken. Yet in today’s climate, it is understandable—any sign of weakness 

in a program can doom its funding. This needs to change. If programs are 

to take significant risks, whether they are technical in nature or related to 

an accelerated schedule, these risks should be declared and the resource 

consequences acknowledged. Less risky options and potential off-ramps 

should be presented as alternatives. Decisions can then be made with full 

information, including decisions to accept the risks identified. If the risks 

are acknowledged and accepted by DOD and Congress, the program 

should be supported.

More closely align budget decisions and program decisions: Because 

budget decisions are often made years ahead of program decisions, they 

depend on the promises and projections of program sponsors. 

Contentious budget battles create incentives for sponsors to be optimistic 

and make it hard to change course as projections fade in the face of 

information. This is not about bad actors; rather, optimism is a rational 

response to the way money flows to programs. Aside from these 

consequences, planning ahead to make sure money is available in the 

future is a sound practice. I am not sure there is an obvious remedy for 

this. But I believe ways to have budget decisions follow program 

decisions should be explored, without sacrificing the discipline of 

establishing long-term affordability.
 

Page 13 GAO-14-145T 

Attract, train, and retain acquisition staff and management: Dr. Fox’s book 

does an excellent job of laying out the flaws in the current ways DOD

selects, trains, and provides a career path for program managers. I refer 

you to these, as they are sound criticisms. We must also think about 

supporting people below the program manager who are also instrumental 

to program outcomes, including engineers, contracting officers, cost 

analysts, testers, and logisticians. There have been initiatives to support 

these people, but they have not been consistent over time. The tenure for 

acquisition executives is a more challenging prospect in that they 

arguably are at the top of their profession and already expert. What can 

be done to keep good people in these jobs longer? I am not sure of the 

answer, but I believe part of the problem is that the contentious 

environment of acquisition grinds good people down at all levels. In top 

commercial firms, a new product development is launched with a strong 

team, corporate funding support, and a time frame of 5 to 6 years or less. 

In DOD, new weapon system developments can take twice as long, have 

turnover in key positions, and every year must contend for funding. This 

does not necessarily make for an attractive career.

Mr. Chairman, this concludes my statement and I would be happy to 

answer any questions.

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